O’Flynn succeeds in removing examiner from building firms

Cork brothers Michael and John O’Flynn have succeeded in removing the interim examiner appointed to four key companies in their construction group and have been put back in charge of their business by the High Court.

Ms Justice Mary Irvine today blocked Blackstone subsidiary Carbon Finance from enforcing personal or corporate loans demands. The judge also stood down four Receivers appointed to the O’Flynn companies, revoking their appointment over certain assets and entities within the O’Flynn Construction Group.

Judge Irvine also restrained new directors appointed by Carbon Finance to the O’Flynn companies from purporting to act as directors of Colebridge International Limited or any other O’Flynn company. She removed the interim examiner appointed to the four companies on July 29th last and directed Carbon Finance to immediately re-appoint the O’Flynn brothers as directors to their companies.

They had been removed following the appointment of Receivers by Carbon. Judge Irvine’s orders became effective immediately. A full trial of all issues before the court will take place in the new law term, beginning on October 7th.

The judge said Carbon Finance had not acted in utmost good faith and had not fully disclosed all relevant information to Judge Brian McMahon on July 29th when he had agreed to Carbon’s application for the appointment of the examiner.

In May Carbon had bought from Nama €1.8 billion in loans tied to O’Flynn Construction and within weeks had moved to appoint an interim examiner after having made demands for the immediate payment of €16.6 million personal loans which Michael O’Flynn stated could have raised had he been given reasonable time.

Michael Cush SC and Brian O’Moore SC appeared with Declan Murphy and Bairbre O’Neil for the O’Flynns and their companies. Eoin McCullough SC, with Bernard Dunleavy, appeared for Carbon Finance. Judge Irvine said the plaintiffs had established a number of serious issues to be tried. In assessing whether damages would be an adequate remedy in respect of any loss the O’Flynns may suffer between now and the determination of the trial judge in October it was necessary to reflect on what had occurred since July 29th.

Carbon had appointed receivers over the entire issued share capital of a significant number of companies including the parent company Colebridge. It had removed the existing directors including the O’Flynn brothers and replaced them with their own agents. The O’Flynns had lost control over management and would have no further say in what happened to them.

If the relief sought by the O’Flynns were refused it was hard to predict what the Group was likely to look like by the time of trial. “At the conclusion of these proceedings it will not be possible to parachute the plaintiffs back into the management roles…..as those companies may no longer exist or be radically changed,” Judge Irvine said.

If the corporate and management structures supporting their positions and income stream was unravelled through Carbon’s potentially unlawful conduct then damages would not be an adequate remedy for them. Factors such as their ability to find equivalent work operating at the most senior level in the international building and construction industry might make it difficult to obtain positions even remotely resembling those they held before July 29th.

Judge Irvine may be caused to their reputation which may not adequately be met by an award of damages. It was not correct or fair for Carbon to suggest the brothers were failed businessmen with no reputation to protect because their companies failed and their debts had to be taken over by Nama.

Reputations could not be metered by reference to such limited criteria. Reputation was concerned with a range of characteristics such as integrity, honesty and decency. A person possessing all of these traits may well become insolvent. Regardless of recent difficulties, it seemed highly unlikely that the O’Flynns could have built up such a substantial international enterprise unless held in good standing by vast numbers of ordinary and influential people in the business community in those countries in which they had traded for so many years. Conversely it was difficult to see how Carbon was likely to suffer significant financial loss between now and October.

Carbon only took over the loans on May 16th this year and only two weeks had elapsed since it first took action on foot of loan demand letters. Judge Irvine said she was entirely satisfied the interests of justice required that the companies remained under the control of the O’Flynns until the trial of the action.